After a dismal start to the year, Tesla (TSLA.US) has staged a remarkable rebound, surprising investors. The stock, which plunged 36% in Q1—its worst quarterly performance since 2022—has now fully recovered its losses.
On Tuesday, Tesla shares extended gains, closing up 3.07% at $489.88, marking a new all-time high. Year-to-date, the stock has surged 21%, with an intraday peak of $491.50. The rally was fueled by progress in autonomous driving, as CEO Elon Musk announced the company is testing fully driverless vehicles in Austin, Texas—without any human occupants—just six months after launching a pilot program with safety drivers.
Bullish investors see this as Tesla potentially fulfilling its long-standing promise to upgrade existing EVs into "robotaxis" via software. The stock's rally has pushed Tesla's market cap to around $1.63 trillion, making it the world's seventh-largest public company, trailing only Nvidia (NVDA.US), Apple (AAPL.US), Alphabet (GOOG.US, GOOGL.US), Microsoft (MSFT.US), Amazon (AMZN.US), and Meta (META.US), while slightly surpassing Broadcom (AVGO.US). Musk's net worth now stands at approximately $684 billion, over $430 billion ahead of Google co-founder Larry Page.
However, uncertainties remain. Tesla's Austin tests are not yet open to the public, with ongoing debates over safety and regulatory compliance.
The stock has been volatile this year. Early optimism about Musk's role in the Trump administration—leading a "Department of Government Efficiency" (DOGE) to streamline regulations—faded as his polarizing political endorsements alienated some consumers, hurting Tesla's brand and sales. Q1 deliveries fell 13% YoY, with auto revenue down 20%; Q2 saw a rebound, but auto revenue still declined 16%.
Conditions improved in H2. Q3 revenue rose 12% YoY, driven by U.S. buyers rushing to claim expiring federal EV tax credits. Tesla shares gained about 40% during this period.
Challenges persist, including the tax credit's expiration, backlash against Musk, and competition from BYD, Xiaomi, and Volkswagen. Tesla's October launch of cheaper Model Y/3 variants has yet to boost U.S./Europe sales significantly—instead, these "stripped-down" models may be cannibalizing premium sales. Cox Automotive data shows November U.S. deliveries hit a four-year low.
Despite headwinds, some Wall Street firms remain bullish. Mizuho raised Tesla's price target to $530 (from $475), citing FSD advancements that could accelerate robotaxi expansion in Austin/San Francisco and "potentially phase out safety drivers sooner." Tesla currently operates human-supervised "Robotaxi" services in Texas and California, but market focus remains on whether fully driverless deployment can materialize.
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